USD/JPY: Bulls testing 109 handle as risk sentiment recovers

The offered tone around the JPY gathered pace in the mid-Asian session, now pushing USD/JPY further into the positive territory just a thread-line short of 109 handle.

USD/JPY finds fresh bids at 20-DMA

The dollar-yen pair is seen extending its recovery mode from Friday’s sell-off and now looks to regain 109 handle as the bears give up control amid diminishing safe-haven bids for the yen, after the Japanese stocks surged following Japanese press reports that PM Abe may put-off a sales tax hike. At the moment, the USD/JPY pair trades higher near fresh session tops printed 108.98, up +0.28% on the day.

Amid quiet markets, focus now turns towards the key risk drivers for the week for the major, which includes the GDP and core machinery orders from the Japanese calendar, while from the US docket, we have the Fed minutes, CPI and industrial production data release that will provide fresh direction on the major.

USD/JPY Technical levels to watch

In terms of technicals, the immediate resistance is located at 109.36/50 (May 10 & 13 High). A break above the last, the major could test 109.97/110 (50-DMA/ psychological levels). While to the downside, the immediate support is seen at 108.47 (daily low/ 20-DMA) and below that at 108.00 (round number).